Last week, the European Central Bank left the key interest rate unchanged at 4.50%, noting that future monetary policy would depend on statistical data. The regulator pointed out a continued decline in inflation. However, given that it is likely to remain above target levels for an extended period, further tightening cannot be ruled out.
Now market participants are awaiting the Federal Reserve's interest rate decision. The meeting of the central bank will be followed by a press conference, at which Fed Chairman Jerome Powell will likely address questions about the state of the US economy and probably shed light on the future of monetary policy (see our review "What dynamic USD to show after Fed's meeting?").
Meanwhile, the EUR/USD pair continues its upward correction that started earlier this month. Currently, the price is testing the crucial short-term resistance level at 1.0574 (EMA200 on the 1-hour chart). Its breakout could result in further corrective gains, pushing the euro up to strong resistance levels at 1.0613 (EMA200 on the 4-hour chart) and 1.0655 (EMA50 on the daily chart).
However, despite its upward correction, the medium and long-term trends is still bearish. The EUR/USD pair is trading below key resistance levels at 1.0730 (EMA200 on the daily chart) and 1.1020 (EMA200 on the weekly chart).
Therefore, short positions remain a priority.
A breakout of the short-term support level at 1.0574 (EMA200 on the 1-hour chart) will pave the way for a further decline in a bear market. In this case, the local support level of 1.0530 can be seen as the nearest target.
For a new bullish market in the medium term, the EUR/USD pair needs to break through the key resistance level of 1.0730. To move back to the upside in the long run, the price needs to overcome the key resistance level of 1.1020.
*) To find out details on trading this pair, see "EUR/USD: Features and recommendations".
Support levels: 1.0574, 1.0530, 1.0500, 1.0448, 1.0400
Resistance levels: 1.0600, 1.0613, 1.0655, 1.0700, 1.0730, 1.0800, 1.0820, 1.0900, 1.0920, 1.1000, 1.1020, 1.1090, 1.1200, 1.1275, 1.1300, 1.1400, 1.1500, 1.1600.
